“MANY HAVEN’T UNDERSTOOD THE OPPORTUNITY IN MAKING EARLY-STAGE INVESTMENTS”

“MANY HAVEN’T UNDERSTOOD THE OPPORTUNITY IN MAKING EARLY-STAGE INVESTMENTS”

Fintech & Financial Services

Dr. Apoorv Ranjan Sharma, co-founder of Venture Catalyst, a seed investment and innovation platform, talks to us about the need of the hour for the investment community and the Indian startup ecosystem and its future

DR. APOORV RANJAN SHARMA, CO-FOUNDER, VENTURE CATALYST
DR. APOORV RANJAN SHARMA, CO-FOUNDER, VENTURE CATALYST

A veteran in the early stage investment community, Dr. Apoorv Ranjan Sharma has established almost 10 incubators and accelerators in the last 14 years including Somaiya Incubator, IAN Incubator, Venture Nursery, Amity Innovation Incubator, JSS TBI to name a few. His latest, Venture Catalysts, (VCats), is a seed investment and innovation platform set up with the objective of nurturing India’s global startups by empowering them with a comprehensive platform that delivers end-to-end solutions for sustained growth. With a 6,500 sq. feet office, the company has created a co-working space and other facilities for startups.

So far, the company has seeded US $1 million and has a target of investing in 20 startups over the next one year. Offering an average of US $250,000 per venture, VCats aims to offer a 360 degree solution through its angel network and advisory board. It invests in startups based on the uniqueness of the concept and the ventures’ potential to create enduring value. To name a few, Plug and Play, its first investment post inception was a global startup accelerator while its most recent investment is vPhrase, an artificial intelligence platform that provides insightful data to companies.

As Vcats’ co-founder, Dr. Sharma is responsible for strategic planning and overseeing the overall functioning of the organisation. With a PhD in incubation and a diploma in mentoring studies from UC Berkeley (offered by Intel-DST Scholarship), he has mentored more than 50 early stage investments including OYO Rooms, Invenzone, Talview, Apnacircle.com, Circuit Sutra, Jigsee, ConfirmTkt and Siftr.

In this interview, he talks to us about the plans for his company, the need of the hour for the investment community and the startup ecosystem and its future.

What was your thinking behind setting up Vcats? Why did you enter the early stage investment sector and what kind of need are you fulfilling here?

This segment is still in a low growth stage. The number of investments happening in India is still quite low especially if you look at the projected 10,000 startups in India by 2020 (by NASSCOM). In a developed economy, at least 20 per cent of the total startups are funded and going by that standard, 2,000 should get funded every year (out of the projected 10,000). With the existing investor community this number is still at a low 250 investments currently.

This is because, unfortunately, not many people have understood the opportunity present in early stage investment. More importantly, there is also a general lack of awareness and we feel that there is a need to bridge this gap and increase the level of awareness.

In the U.S., there are 3,00,000 angel investors while China has 17,700 registered angel investors. The size of this group in India is not even a 1,000. This gap can be bridged by offering a platform to those interested in angel investment. The platform which we have given to the market with our expertise in early stage investment also gives them confidence.

Currently, we have a large network of around 800 angel investors which aims to consolidate startups in India before extending its services on a global level. The majority are first timers who are not into any angel network and we brought them into our angel investment community to increase the number of investments in India. We have a track record of helping the early stage investment ecosystem for the last decade and a half.

What makes you say yes or no to a deal?

Things like a great team and a large market are basic criteria. What excites me is a strong revenue model and disruption in their product or business models. I will look at a company only if these factors are fulfilled.

Tell us about a time you got lucky as an investor.

I’d say that would be with vPhrase which is one of the few companies in the artificial intelligence space that does language generation. It writes content after reading the data which is totally unheard of and this is disruption.

Another company is ConfirmTkt which is a unique train ticket discovery platform. There is a large population travelling by railways everyday and a good number of them are on the waiting list. This company tells those on this list about their chances of getting a confirmed seat.

What is it about your role that excites you?

The most exciting thing is the ability to help entrepreneurs build their businesses and contribute towards their success.

Tell us about a pitch from an entrepreneur you’ll remember forever.

Our latest investment in LenDenClub was one of the simplest pitches I have heard in a long time. The company basically controls the number of defaults which is something that is very challenging in the lending sector. Within two minutes of their presentation, everyone in my investor group was convinced about the disruption in the business model.

Where do you see the VC ecosystem in India 10 years from now?

India will soon have at least 100 angel networks and have around 3,000 investments taking place every year. The ecosystem will have at least close to million angels joining hands with around 5,000 incubators coming up.

According to you, what are the “yet-to-be-hot” sectors?

FMCG, food sector, artificial intelligence and healthcare. These are sectors where you have the possibility of disruption.

What are your future plans for the fund? Where do you see VCats going in three years from now?

We will continue with this current pace of investment. Going forward, we plan to be in at least five cities in India, with our platform and network of over 500 investors operating from these cities.

Poornima Kavlekar has been associated with The Smart CEO since the time of launch and is the Consulting Editor of the magazine. She has been writing for almost 20 years on a cross section of topics including stocks and personal finance and now, on entrepreneurship and growth enterprises. She is a trained Yoga Teacher, an avid endurance Cyclist and a Veena player.

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